• Beta Enterprise is considering a new 3-year expansion project that requires an initial investment in fixed assets of $1million, and an initial investment in net working capital of $100,000.
• The fixed assets will be depreciated straight-line to zero over its 3-year life, and will have a market value of $120,000 at the end of the project.
• The project is expected to generate $600,000 in annual sales, with costs of $200,000.
• If the required rate of return is 10% and the corporate tax rate is 21%, should this expansion project be accepted?